Exactly one year later

It's been one hell of a year. I'd say it's been one of my busiest years ever. The crash in the real estate market has been good, great, and excellent for the tech industry. The concept behind this is a fun one. There's really only so much money out there, and the investors that were driving tech, biotech, and beanie baby innovations were all just pumping their money into the Fat Bastard that became the real estate industry.

Thank god it's over. The rest of the world can prosper now. I see that all the Costa Rica property spammers have taken good care of my blog. (bleh, time to clean up some comments)

What are we left with now. Well... I was right about everything. I mean, I might as well have predicted gravity, but, hey, I feel smart about it. I don't even know where to begin. Say you had bought those Countrywide Puts that I was recommending? Well you would have quadrupled your money. Say you listened to David Lereah and bought in 2006? Well you would have 14% less money now. I'd say that makes me about 5 times more right. (give or take, but hey who's counting)

The market has changed, and now we are in a new dynamic. Just where is Mr. Bottom going to be? If you are the kind of person who might end up on this blog, you are probably shopping for real estate. You might want to know "Just when SHOULD I buy?" That's the million dollar question... I mean it was the million dollar question in 2005, now it's the $850,000 question, and should we wait till it's the $600,000 question? Should we wait till it's a $550,000 question? These are all great questions.

Instead of answering them, here's a picture of some past statistical data that just looks cool:


Seriously though. Let's talk about it. Why not buy now? Why not buy a year from now? Here's something to keep in mind. The above chart shows movement from 1990 to about 2007. The chart then drops off the edge and dies a tragic death. This chart is a measure of change, not a measure of prices. In a way, that actually makes it more useful. Essentially, real estate was in positive growth territory all the way from 1997 to half way into 2006. That's 9 years of positive growth. Now we have had almost 2 years of downward movement. The last downward cycle we had in real estate followed a surge that was the statistical equivalent of mini-me to the most recent real estate boom, and it took 6 years before any real gains could be established when the graph went into negative terrirtory. 6 years!

This actually makes a lot of sense if you think about it. When the dot com crash occurred, it took almost 5 years for people to take the internet companies seriously again. These movements take time, and prices will likely flat line for years after they have finally reached a settling point.

There is no crystal ball here. If you want to buy, buy to live. Do the math. Run a rent-vs-own calculator and set the rent appreciation and housing appreciation values to 0%. See exactly what you are getting into. If you are paying $300 more a month, but it's worth it to you so you can own the place you live in and get a tax writeoff, that sounds great! If you are paying double what rent would be for your POO (Pride Of Ownership), well maybe you aren't thinking things out. Financing is hard now. Expect to put 5% down for under 417k, and 10-15% down for over that. If your credit score isn't over 700, maybe it's not a great time for you to buy yet.

As it stands now, prices are still plummeting and cooler heads will prevail in much larger houses for a smaller price. The deals you can find now are few and far between with most sellers still clinging to the prices of yesterday. The actual inventory of reasonably priced homes is very small, but the inventory of overpriced homes is huge. It's not a buyer's market..... not yet anyway.

Good to be back!